Early next month, running alongside the crunch COP21 climate talks in Paris, the Sustainable Innovation Forum 2015 will bring together high profile figures from the worlds of business and politics to discuss the opportunities and challenges for the burgeoning green economy. One of the speakers at the event is Sean Kidney, chief executive of the Climate Bonds Initiative, a non-profit body working to open up new sources of capital for green investment.
Speaking to PV Tech ahead of the event, he reveals why he is confident that a transition to a low-carbon economy through investment in new technologies such as solar can happen as long as national governments make the right choices.
What in your view will come out of COP21 and how will that help stimulate investment in the green economy?
There will be something. But you're not going to get 197 countries in the world agreeing on a common policy in 10 years, 20 years or frankly 30 years. What counts is the momentum that is being developed, I think, by the INDCs [the ‘intended nationally determined contributions’ being submitted by countries ahead of COP], because really all the countries are saying now ok, this is our plan. And now we've got something to work with.
The approach we're taking is to push for agreeing investment plans to accompany the INDCs, which are quite granular and so you can see where the deal flow is. And that becomes much more useful to driving capital and getting things happening, and getting developers confident about where they should take risks and all those sort of things. So that's for us really the big opportunity of this COP, to take the beginning of what is effectively global green transition planning, on a country-by-country basis, and to start linking that up with where the capital is that's looking for yield.
Some of the INDCs have been criticised for lacking ambition, but presumably the price-tag for delivering them is going to run into the trillions of dollar. Where will that sort of money come from?
Remember most of it isn't cost, most of it's investable – it just requires governments to get the settings right. Freeways are not free market developments – the government has to allocate the land, allocate the licence and then a private company can develop it and get the revenue from the tolls over 20 or 30 years, but it's still government-mediated. And that's no different to pretty well anything and everything that has to be done for climate change. Investors are simply looking for clear signals about the kind of kit to build.
Where does responsibility lie for doing that work to help countries produce green investment plans?
We're launching a green infrastructure investment coalition in Paris, which is mainly investors, national development banks and companies delivering on country green plans. So it's very much a platform to have those sorts of discussions. But then we're going to need other people to help countries to get a plan to bring to the table so investors can understand what's going on. The Global Green Growth Institute is the obvious choice here, and [the institute’s director-general] Yvo de Boer is saying they're going to. They’ve already done it for a number of countries, including Ethiopia, as part of their existing engagements. They just need to do more.
Generally, how encouraged have you been by conversations you’re hearing about how seriously governments are now taking the shift to a low-carbon economy?
What I'm encouraged by is China's commitments and the green finance work it’s doing domestically entirely separate to COP to make sure they deliver on their green ambitions. I'm very encouraged by what the Indian government is doing with its unbelievable, extraordinary ambition around renewables, around rail, around water. It's every activist's dream! I’ve spent a lot of time in India recently – people are talking about 10GW [solar] pipelines. So those two things cheer me up unbelievably. I'm not particularly cheered by the endless fighting in the US Congress. That's very unfortunate for the world, for the planet. And I just hope there's long enough that they can be tried in the court of public opinion for the damages they're going to do for the rest of the world.
But, hey, [Canada’s new prime minister Justin] Trudeau: one of the first things he said was climate change is his number-one priority. That’s cheering. So at a national level around the world you see a lot of good stories, a lot of bad stories. And the point about all this is we're going to have to fight this nationally, it's not going to be sorted out by international agreements. What we need are national programmes of transition to a green economy – we need to show people why it's better for their economies, better for their kids, for their health.
And presumably the expectation is that with such programmes in place, the finance will duly follow?
There are two things you've got to know about finance. The first thing is we need to change the story about marginal clean energy to an understanding that pretty much everything we need to do about climate change is actually a kind of infrastructure and if we talk about infrastructure, of course we have subsidies and feed-in tariffs. Since when have we built infrastructure without the government mediating the result? Since when have we ever built a bridge by letting the free market sort it out – or a hospital or a railway line? It doesn't work that way. And energy is just another one of those. There's nothing special about clean energy in that sense. So while people think it's special and getting a special deal, they're missing the point.
The second thing is that we have a world awash with cheap capital. Now, if ever there was a time in the world's history when we need to rebuild the whole planet at zero interest rate it's right now. So the key thing is to bear those two things in mind. And then it's only a matter of working out the mechanics and the technicalities. So if you keep those in mind you realise why I've actually got some hope – I think we may be able to pull off an amazing last-minute escape out of the climate jail we've built ourselves.
I think we may be able to pull off an amazing last-minute escape out of the climate jail we’ve built ourselves
What will you be talking about at the Sustainable Innovation Forum?
Well, for a start don't say 'innovation' to investors, please. Keep it all safe and secure – we don't want any innovation here. That’s the first thing I'm going to say. We've got to reposition technologies like solar, which we can now, as incredibly safe, low risk –much, much safer than coal, diesel or petrol because there's no price volatility in the operation. You can predict your costs for 20 years. Where else you can do that? That's prefect for insurance funds. So: no innovation here, it's all safe and secure is my first message.
And then the second thing is: it's about making choices about how to build the right world and allocating public sector grunt to making sure the choices are delivered. That's what governments do. We just haven't been doing it for green infrastructure. We've had our heads stuck in the sand and saying 'green is separate, we'll have to tax people for that, it's going to cost money’. But actually no – it’s just about making the right choices; choices that are better informed by long-term risk, that's all.
Look at what Morocco is doing by building a vast solar plant in the desert – they're doing it for reasons unrelated to price, they're doing it because they've got to get something quick. And the fastest way you can get energy at scale into the system is by building a solar plant. That's an example of how government's make calls all the time, ignoring price if where they have to, to get the right sort of future. And that's really all we're talking about here.
The Sustainable Innovation Forum is being organised by Climate Action, part of the Henley Media Group that owns PV Tech’s parent company, Solar Media. For further information on the event, click here.
